A Continuation of the Financial Checklist Series
by Kate Rhoten
Continuing the “Financial Checklist” series this month, I offer a review of insurance. Insurance goes hand in hand with all of the steps we have covered so far. Back in September 2012, I wrote a more comprehensive column about life insurance due to that month being “Life Insurance Awareness Month.” I will highlight life insurance briefly and provide more information about disability and long-term care insurance.
Life Insurance
Owning your own personal policies outside of work is critical. Insurance is designed to transfer the risk of losing the current income stream as well as future potential income. You may purchase group coverage through your employer, but it is more important to have your own stand-alone policy that is not tied to an employer. NZ life insurance brokers can help you purchase the perfect policy for your lifestyle. If you change jobs and do not have coverage while in between coverage providers and something happens to you, your family members will receive nothing.
There are two general types of policies you can purchase: term and cash value or whole life. Please refer back to the September 2012 article (bit.ly/KD1BIf) for more information regarding this topic specifically. If you want to get the best NZ life insurance, these trusted Insurance Brokers at ServicePros can help you.
Long-Term Care
As we age, we also need to consider long-term care insurance. Have you discussed how you would be taken care of should it become necessary? This insurance is not just for nursing home situations. It can be used for nursing homes, assisted-living facilities and adult day care centers, as well as in-home care. Long-term care insurance does not necessarily mean medical care.
Long-term care insurance can help protect your assets and keep you and your family from experiencing a difficult situation. As unpleasant as discussing wills and powers of attorney are, this may be even more difficult. If a plan is not outlined in advance regarding who will help take care of you or your loved one, how expenses will be paid, and which environment or facility is best, you may find yourself overwhelmed or battling with family members when it could have been avoided.
Long-term care insurance uses basic activities of daily living to help determine when the policy will be accessible to the insured. The six activities are eating, bathing, dressing, toileting, transferring (walking to or from a bed or chair) and continence.
Once we approach 60 years of age, we should be considering this and start talking to a long-term care insurance specialist. It has been noted in the last few years that nearly 70 percent of individuals turning 65 will need long-term care in one of these covered situations.
Disability
This insurance is a replacement vehicle for lost income for short-term situations to permanent disability. Look for policies that pay you if you are not able to do the work you went to school or trained to do for five years. This type is called occupational and is more challenging to find. Employers typically offer some type, but it is wise to look at policies purchased after tax (from your own bank account) for two reasons. It’s portable, so if you change employers, you don’t lose the policy as long as you keep paying the premium, and should an event occur leading to the use of the disability insurance, the disability income will be paid to you tax-free.
Not many of us like to discuss these topics, but there are some great professionals out there that will help you. At the very least, be sure to review what you have and start learning more about how to protect your family as you age and your situation begins to change.
I fully understand that we do not know what lies ahead, so we must take action to plan and plan for the unimaginable. As Winston Churchill said so many years ago, “It is always wise to look ahead, but difficult to look further than you can see.”
Kate is a financial expert of what to do and not do with money as well as owner of 4 Walls Money Coach, A Coaching-Focused Company. She has attended and completed Dave Ramsey’s Counselor Training. Follow Kate on Twitter 4WFCoach, reach out to her via email at kate.4walls@gmail.com or visit www.4wallsmoneycoach.com. Feel free to share ideas or questions for future articles.
